When potential GDP increases, _______. A. aggregate demand ...

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When potential GDP increases, _______.
 
  A. aggregate demand increases
  B. aggregate supply increases
  C. both aggregate demand and aggregate supply increase
  D. the price level rises

Question 2

Refer to Table 2-3. Assume Dina's Diner only produces sliders and hot wings. A combination of 80 sliders and 100 hot wings would appear
 
  A) along Dina's production possibilities frontier.
  B) inside Dina's production possibilities frontier.
  C) outside Dina's production possibilities frontier.
  D) at the vertical intercept of Dina's production possibilities frontier.

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Answer to Question 1

B As Figure 19.2 in the text shows, an increase in potential GDP increases aggregate supply.

Answer to Question 2

A

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